LONDON, Jan 30 (IFR) - Rampant demand for Altice’s US$5.3bn-equivalent bond deal has pushed the gross order book close to US$60bn, according to a banker close to the deal.
While this is not as large as the whopping US$100bn of combined orders for Altice and Numericable’s record breaking US$16.7bn-equivalent bond deal priced in April 2014, the oversubscription is much higher this time around as the deal is far smaller.
“It’s an incredibly painful allocation process,” said the banker.
The runaway demand for the deal, with orders from close to 400 accounts, is all the more impressive given how much pricing has tightened since it was announced last Friday.
Initial price whispers on Altice International’s EUR500m 8NC3 senior secured notes were in the low 6% yield range. Official price talk on this tranche came out at just 5.375% area on Thursday, however.
The tight pricing has been achieved in part as Altice’s outstanding bonds have rallied significantly since the new deal was launched, with some tranches bid more than 100bp tighter.
“You usually price a new deal relative to secondary, but in this case the new deal has repriced the outstanding bonds as we’ve gone on,” said the banker.
“It’s done nothing to dent demand though. The order book actually grew when we tightened pricing.”
The combination of incredibly tight pricing with a large order book has fuelled market speculation on how the deal will trade after it prices, which is scheduled for around 1430GMT.
“All the signs say the deal should do well, but I don’t know because I don’t see any value left at those levels,” said one bond investor. “There could be a lot of guys in the book looking to flip on the strong technicals.”
A second bond investor said that many people have predicted that the deal could trade up as much as five points on the break, but the tight pricing adds an element of uncertainty.
“People have been attracted by the historic performance of jumbo telco deals, but Altice and Wind’s deals last year offered around 50bp of premium,” he said.
“This time around it’s completely reliant on secondary demand ramping in post-deal.” (Reporting by Robert Smith, editing by Helene Durand and Sudip Roy)